What insurance policies you should own to cover your business
Author~ Michael Infanger, owner of Infanger Insurance Inc in Idaho Falls, ID
“Just buy the cheap policy”
You’ve finally done it, you bought (or, already own) the franchise of your dreams. You’re making money (or, will soon). You have an accountant. You have payroll. Now, you just need to go online & get the cheapest business insurance, right?
We hope you answered, “Wrong!”. Most insurance policies really are similar in coverage. However, the smallest deviation may put you many miles off target. We are biased, but, we highly recommend having an insurance agent who can help you understand the requirements from your franchisor.
Most franchisors require specific coverages and/or endorsements. Below are some optional coverages required for one of our franchisee clients. Many didn’t come ‘standard’ on their previous policies. Please review this sample against your current insurance:
Many policies have a coinsurance clause. This is an insurance company’s method to encourage you to be close on your calculations for replacement coverage. Waiving this requirement removes the potential surcharge in a claim, if you aren’t accurate on your replacement cost valuations.
Most insurance covers fire loss, but, approximately 25% of businesses won’t reopen after a claim, due to the downtime without income while waiting for the building to be rebuilt/repaired. Here is a great article that goes into more depth on business income: https://www.iamagazine.com/strategies/read/2017/10/03/why-business-income-is-the-most-important-property-coverage)
If you are a food franchisee, this could be important to help you recover your losses due to mechanical/refrigerator breakdown.
-Increased Employer liability limits
Many work comp policies come standard with $100k bodily injury per employee for an employer who is proven grossly negligent. Many contracts require the higher $1M limit, instead.
-Waiver of subrogation
This prevents the insurance company from recovering funds from a negligent third party, like your franchisor or, landlord.
This endorsement extends certain coverage to someone besides you, the policyholder.
These coverages, along with doing an interview to assess your specific needs, are some of the options we encourage you to review with your agent. Insurance is meant to limit risk of financial harm. If you have good insurance, you can just worry about growing your franchise. We wish you good luck in your future endeavors!
Michael Infanger, owner of Infanger Insurance Inc in Idaho Falls, ID has been a licensed insurance agent since 2009. His passion is helping business owners obtain the best coverage. Feel free to reach out to him for further questions at email@example.com or 208-557-8157.
Have you always wanted to own your own business? I can help, contact me today!